How to start a business in Russia?

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There are three legal structures for doing a business.

1. If you are already doing a main business abroad there are reasonably setting up and registering in Russia the branch or the permanent establishment (PE) of the foreign company.

2. It is also conceivable forming a legal entity with the participation of the foreign capital, or

3. Register as an individual entrepreneur, who is running a firm without the formation of a legal entity.

A step-by-step guide to forming a legal entity

Whether you are a foreign citizen, a person without citizenship, or a representative of a foreign company you can register a legal entity by yourself. 

The knowledge below could help you pass the registration process and compile the necessary documents.

Open a company in Russia – start with business

Deciding on a business legal structure

The list of a business’s legal structures and the features of their legal status, including the requirements for company officers, the liabilities of founders, and the registration requirements.

Registering and running an open joint-stock company (OAO, the Russian equivalent of a public company), closed joint-stock company (ZAO, which corresponds more to the concept of private companies), or limited liability company (OOO) requires more legal administration than an individual entrepreneur or partnership. 

On the other side, if you are a partner or an individual entrepreneur, the outstanding debts incurred by the business can be met from your assets.

In Russia, the most common legal entities with foreign capital are:

In all three cases, the liability of their shareholders for the company debts is limited to the number of their contributions to the nominal capital of the company.

One of the main differences between open and closed joint-stock companies is the number of shareholders, which is limited to 50 in the case of a closed joint-stock company. 

As a general rule, shares in both companies are freely transferable. However, existing shareholders of a closed joint-stock company have pre-emptive rights in acquiring the shares of the withdrawing partner.

It is highly unlikely that start-ups will start life on the stock exchange so in the «Starting a business» chapter we will concentrate on limited liability companies.

When you have decided on the right business legal network before you start company formation you should choose the name and the location (legal address) for the company.

Counting on your company location you should be advised on 1) the appropriate registering office, where you should file the records for business registration, and 2) the local tax office, where your company should register for taxation purposes. Due to the one-stop-shop procedure, it is generally the same office. 

Creating the foundation documents

Following Russian legislation, the founders who are forming a company should organize and approve (sign) the foundation documents (the charter and the founding agreement).

A limited liability company, as well as a closed joint-stock company, may be formed by one or more individuals or legal entities. If the number of shareholders exceeds 50, the company must be transformed into an open joint-stock company.

The foundation documents inter alia should include:

  • The full name of the business and the abbreviation it is going to use in business;
  • The names and signatures of the founders who are starting the company;
  • The amount and nature of the shareholders’ contributions (cash or in-kind); 
  • The procedure, in which the contributions will have to be made are the rules for running the company
  • Internal management affairs;
  • Legal responsibility.

Also, the company officers (executive bodies) must be appointed that are usually named as directors in the charter.

Any amendments and changes to the charter and the founding agreement must also be registered. The same applies to limited liability companies in the case of a change of shareholders.

The minimum capital requirement is 10 000 RUR. 

Contributions can be made in cash or kind. At the time of registration, each member must have paid up at least 50% of the amount of his contribution, and the balance must be paid within 12 months.

Preparing the set of the required documents for registering

To incorporate a company you must send the following documents to the registration office.

  • Application for registration of a company (form Р11001);
  • Decision (protocol) on forming of the company (in the prescribed manner);
  •  Foundation documents in duplicate (in case of paper filing by hand or by post), or in one copy (in case of e-filing);
  • Extract from the business register of an appropriate foreign country or other equal proof of the legal status of the foreign legal entitythe founder;
  • Documents on payment of state duty.

Only one of the founders (no matter whether an individual or legal entity, resident or non-resident) of registering the company should be the applicant. Form Р11001 recommended by the FTS is applied only to limited liability companies.

The abovementioned documents should be given taking into account the following requirements:

  • Each document containing more than one sheet should be stitched and numbered;
  • The number of sheets should be proved by the signature of the applicant or the notary on the back of the last sheet on an insertion place;
  • Application and the appendix should be filled in by the typescript text or by the hand printing notes with the use of ink or a ballpen of dark blue or black color; 
  • If any section or pinpoint of the section of the application is not filled in, at the corresponding graphs the crossed-out section is put down.

Documents are filled in (issued) in Russian. Documents in a foreign language are subject to assurance by an apostille or consular legalization and the subsequent translation into Russian. The translation should be notarized.

The authenticity of the applicant’s signature on the application should be notarized.

Documents in which the authenticity of the applicant’s signature is witnessed by a foreign notary, are subject to assurance by an apostille or consular legalization and subsequent translation into Russian. The translation should be notarized.

Filing the required documents to the registration office.

The authorized tax authorities decide on the registration of the commercial institutions (except the credit and bank organizations), and also regarding the number of the noncommercial organizations.

You should file the needed set of documents to a registration tax office in a place of the future location of forming the company.

You can file the required documents in the following ways:

  • Paper filing by hand in the registration office (personally or through your authorized representative);
  • Paper filing by post;
  • E-filing via the Internet, including the use of a single portal of public and municipal services.

Within no more than 5 working days since receipt of the documents, the registering authority should review the documents submitted and either make the decision on the state registration of your company making appropriate records in the State Register, or make the decision on refusal of registration.

Registration of a company is a one-stop-shop procedure following which the registering authority not only makes a business registration but also registers a company for taxation purposes, sending electronically the company data to extra-budgetary funds and statistical agency. There is no further need to visit any other authorities to make a registered company operational.

Receiving the incorporation documents

If the review of your documents has passed successfully, on the day appointed by registering authority you can take out the following documents:

  • The Incorporation Certificate (full name is the Certificate on State Registration of the Legal Entity);
  • The Tax Certificate (full name is the Certificate on registration in tax authority);
  • One copy of foundation documents gives you back with the mark of registering authority;
  • Extract from the Common State Register of the Legal Entities.

It is important to note that the abovementioned documents should be issued by registering authority no later than on the 6th working day since the day of receipt of the application for the state registration.

In case you did not refer to the registration authority for obtaining the documents, they will be sent to the legal address of your company. At the e-registration, you can choose the way of receiving the documents.

Manufacturing the seal.

After receiving the documents of company registration you should make your company seal.

Manufacturing of the seal is provided by a commercial organization of your company director’s choice.

Opening a bank account.

With the registration documents and company seal, you are entitled to open an account in any bank of your choice.

Note that within seven days from the date of a bank account opening you must notify your tax authority of this information.

After the abovementioned actions, your company is ready to start a business.

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